ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
INDIAN AGRICULTURAL PROGRAM OF ONTARIO
Plaintiff
– and –
GLEN HILL and MICHAEL HILL
Defendants
Jessica Byles, for the Plaintiff
No one appearing for the Defendants
HEARD: November 9, 2021 and
April 8, 2022
(By Videoconference)
REASONS FOR JUDGMENT
(Motion for Default Judgment)
Corthorn J.
Introduction
1The Indian Agricultural Program of Ontario alleges that Glen Hill and Michael Hill are collectively and individually in breach of a series of loan agreements, conditional sales contracts, and general security agreements.1 The general security agreements relate to monetary loans and the purchase of farm equipment on credit.2 The Program brings this motion for (a) default judgment with respect to the Defendants’ monetary indebtedness and (b) relief to assist the Program in re-possessing the farm equipment.
2The Defendants’ monetary indebtedness to the Program is alleged to be approximately $500,000. The Program’s position is that it has a general security interest over 11 pieces of farm equipment.3 Some of the farm equipment is relatively new (2011 and 2013 model years), whereas some of it is quite old (with one item dating back to the 1976 model year). There is no evidence as to the present value of the farm equipment.
3In addition to its security interests, the Program relies on an assignment made by the Defendants of their collective rights to proceeds from crop insurance for the 2018 crop year. To date, the insurer has refused to disclose to the Program the monetary amount of those proceeds.
4Prior to bringing this motion, the Program was thwarted in its efforts to (a) ascertain whether the Defendants are still in possession of the farm equipment, and (b) determine where the farm equipment is currently located. In November 2021, following the hearing of this motion, the court released an interim endorsement: Indian Agricultural Program of Ontario v. Hill, 2021 ONSC 7738. Pursuant to that endorsement the Defendants are, on an interim basis, prohibited from disposing of, alienating, encumbering, selling or assigning ownership of the farm equipment.
Background
5The Program is a provincial, non-profit corporation which provides farm and agri-business financing to Status Indians in the Province of Ontario. The Defendants are a father and son who reside in the Township of Tuscarora, Ontario on the Six Nations Reserve (“the Reserve”). The Defendants are both members of a First Nations people within the meaning of the Indian Act, R.S.C. 1985, c. I-5. The Defendants operate a cash cropping business on Reserve lands (“the Property”).
a) Financing Obtained Through the Program
6Collectively, the Defendants have been accessing financing through the Program for at least 15 years.
The General Security Agreements4
7The Program entered into a GSA with Glen in 2007, pursuant to which Glen granted the following security interest to the Program,
[A] security interest … in all inventory, livestock, equipment, business assets or assets specified in the attached Schedule “A” now or hereafter placed upon the premises located at 1205 3rd Line, R.R. #1 Ohsweken, ON NOA 1MO (the “Premises”) or used in connection therewith and in which Debtor now has or interest in all of its right, title and interest to any trademarks, trade names, contract rights, and leasehold interests in which Debtor now has or hereafter acquires. The Security interest shall secure the payment and performance of all liabilities and obligations of Debtor to Secured Party of every kind and description, direct or indirect, absolute or contingent due or to become due now existing or hereafter arising.5
8A copy of Schedule ‘A’ to Glen’s GSA is not included in the record. The court infers from the lack of inclusion of a copy of Schedule ‘A’ that the schedule was not attached to Glen’s GSA.
9All loan contracts, promissory notes, conditional sales contracts, and other documents upon which the Program relies in support of its claim against Glen are dated between April 2011 and September 2018.
10The covenants in Glen’s GSA include that Glen is required to keep collateral on the Property, to notify the Program of any change in or discontinuance of his business, and to not sell, dispose of, or transfer any of his interest in the collateral.
11In Glen’s GSA, “default” is defined as including involvement in financial difficulty, such as an assignment for the benefit of creditors or the institution of bankruptcy proceedings.
12The Program registered Glen’s GSA under the Personal Property Security Act, R.S.O. 1990, c. P.10 (“PPSA”). That registration remains current and is identified in the Personal Property Security Registry as covering “ALL ASSETS”.6
13In September 2009, Michael executed a GSA in favour of the Program. The terms of Michael’s agreement are the same as the terms of Glen’s GSA. Apart from a 2008 conditional sales contract (for approximately $19,700 to purchase used farm equipment), all loan contracts, promissory notes, conditional sales contracts, and other documents upon which the Program relies in support of its claim against Michael are dated between 2011 and 2018.
14The Program registered Michael’s GSA under PPSA. That registration remains current and is identified in the Personal Property Security Registry as covering “ALL ASSETS”.7
Conditional Sales Contracts, Loans and Promissory Notes
15From 2008 to 2018, the Defendants, individually and collectively, entered into a series of loan contracts, conditional sales contracts, and a revolving demand loan agreement. For each such contract or agreement there is one or more of a related promissory note, a PPSA registration, or an acknowledgement of assignment. The documents upon which the Program relies in support of its claims against Glen and Michael are listed in Schedule ‘A’ to this ruling.
16Two affidavits from the Program’s General Manager, Jamie Hill, were filed in support of the motion. Those affidavits were sworn in June 2020 and November 2021; they are referred to herein as “the first affidavit” and “the second affidavit”, respectively.
17After the November 2021 date on which the hearing of this motion commenced, the court determined that there were deficiencies in the evidence related to the following matters:
a) The documents upon which the Program relies with respect to its claim for monetary damages arising from the alleged default on the various loan contracts, conditional sales contracts etc. Evidence was required to,
i) correlate the amounts claimed to the particular document pursuant to which the indebtedness is alleged to arise; and
ii) identify the amount of the indebtedness as of the date of default (i.e., on a contract-by-contract basis);
b) The basis for the claim of pre-judgment interest at the rate of two (2) per cent for the $17,811.86 which Glen, alone, is alleged to owe the Program;
c) The alleged security interest in the farm equipment described at paras. (l)(ii) and (xi) of the notice of motion (a 1976 International 496 Wing Disc, Model 496 and a 1996 Chevrolet 2500, respectively); and
d) With respect to the assignment of crop insurance proceeds, (i) Agricorp’s prior written consent to the assignment, and (ii) the Assignee Confirmation Notice which the Program received from Agricorp.
18Those deficiencies were reviewed with counsel for the Program during the continuation of the motion on April 8, 2022. The Program was given the option of addressing the evidentiary deficiencies by calling Mr. Hill to give viva voce evidence at a later date or by filing further affidavit evidence. The Program chose the latter option.
19The Program filed an affidavit sworn by Mr. Hall in May 2022 (“the third affidavit”). In that affidavit, Mr. Hall states that the Program is abandoning its claim for pre-judgment interest at the rate of two per cent on the $17,811.86 it claims from Glen. I infer from the balance of the record that the Program now claims pre-judgment interest on that amount pursuant to ss. 127 and 128 of the Courts of Justice Act, R.S.O. 1990, c. C.43.
20Also in the third affidavit, Mr. Hall states that the Program is abandoning its claim based on an alleged security interest in both the 1976 International 496 Wing Disc, Model 496 and the 1996 Chevrolet 2500.
21In the third affidavit, Mr. Hall addresses the evidentiary deficiencies with respect to the date of default, the amount owed as of the date of default, and the pre-judgment interest rate – all on a contract-by-contract basis. That evidence is provided in a detailed chart at para. 3 of the third affidavit. Last, the documents which the court requested with respect to the Program’s claim to entitlement to the crop insurance proceeds are attached as exhibits to the third affidavit.
The Issues
22The following issues are determined on this motion:
Based on a combination of the Defendants’ deemed admissions and the evidence before the court, has the Program established that it is entitled to default judgment?
For the purpose of enforcement of the default judgment, if granted, does a bailiff or do the police have the authority to enter the Six Nations Reserve to repossess the farm equipment?
Is the Program entitled to the crop insurance proceeds?
Issue No. 1 - Based on a combination of the Defendants’ deemed admissions and the evidence before the court, has the Program established that it is entitled to default judgment?
23The Program restricts its claims to those which it is entitled to advance in its capacity as a secured creditor of the Defendants.
a) The Program is a Secured Creditor
24In December 2018, the Program received a notice of bankruptcy and request for a first meeting of creditors of the Defendants. The insolvency trustee for the Defendants is MNP Limited.
25The Program responded initially, in January 2019, by submitting a proof of claim with respect to each of the Defendants. In September 2019, the Program submitted a revised proof of claim with respect to each of the Defendants. The Program identified a secured claim against Glen in the amount of $333,078.86 and against Michael in the amount of $362,432.63. There is some overlap in those two amounts because Glen and Michael both signed some of the loan and/or conditional sales contracts.
26As against each of the Defendants, the Program also identified an unsecured claim of approximately $100,000. The unsecured claim is based on an irrevocable direction executed by the Defendants in favour of the Program. Pursuant to that direction, one of the Defendants’ customers was to pay the Program, instead of paying the Defendants, for goods delivered by the Defendants to the customer. Despite the irrevocable nature of the direction, on instruction from the Defendants, the customer ceased making payments to the Program. The unsecured claim is, however, not relevant for the purpose of this motion.
27The requisite notice pursuant to s. 244(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (“BIA”), was served by the Program on the insolvency trustee. The insolvency trustee was also served with the record on the motion for default judgment. The insolvency trustee takes no position on the motion.
28The Program’s status as a secured creditor arises from the registration under the PPSA of Glen’s GSA, Michael’s GSA, and Conditional Sales Contract Nos. 304-003, 304-004, 304-005, 138-14, 138-15, 138-16, and 138-17. As a secured creditor, the Program is entitled to enforce and attempt to realize on its secured interests outside the scope of the bankruptcy proceedings.
29Between them, the GSAs apply to secure all indebtedness evidenced by the Loan Contracts (Nos. 00066-13, 304-002, 304-006, and 304-007) and the Revolving Demand Loan Agreement (No. 304-001). The indebtedness evidenced by those documents falls within the scope of the final sentence of the security interest quoted in para. 7, above (i.e., “the payment and performance of all liabilities and obligations of Debtor to Secured Party of every kind and description, direct or indirect, absolute or contingent due or to become due now existing or hereafter arising”).
30The Program chose to pursue this action instead of participating in Glen’s and Michael’s respective bankruptcy proceedings. Because secured debts do not constitute provable claims in bankruptcy, Glen and Michael are not released from them: see s. 121 of the BIA and Martin v. Canada, 2015 TCC 118, 2015 D.T.C. 1169, at para. 40. By not participating in either of the Defendants’ bankruptcy proceedings, the Program is not entitled, for the unsecured portion of their claims, to a distribution amongst the creditors (i.e., if there is such a distribution) within the bankruptcy proceedings: see Martin, at para. 26.
b) The Total Amount of the Program’s Secured Claims
31Schedule ‘A’ to these reasons, includes a list of the documents which support my finding that the Program is a secured creditor of the Defendants. Schedule ‘A’ also includes my findings, on a contract-by-contract basis, with respect to the date of default and the amount owed as of the date of default. Those findings are based on Mr. Hill’s evidence, including the chart at para. 3 of the third affidavit.
32Based on the evidence in the first, second and third affidavits, I find that the Defendants are solely or jointly liable to the Program, in its capacity as a secured creditor, for the following principal amounts:
Glen is solely liable to the Program for the sum of $17,811.86;
Michael is solely liable to the Program for the sum of $29,277.24; and
Glen and Michael are jointly and severally liable to the Program for the sum of $437,112.86.
33The amounts referred to immediately above are exclusive of pre-judgment interest. In these reasons, I do not determine, on a contract-by-contract basis, either the applicable pre-judgment interest rate or the amount of pre-judgment interest which accrued from the date of default to the date of judgment. The pre-judgment interest rates listed in Schedule ‘A’ accord with those listed in the chart at para. 3 of the third affidavit. Those rates do not reflect the court’s determination of the applicable pre-judgment interest rates.
34Counsel for the Program shall arrange an appearance before me to address the applicable pre-judgment interest rates and the calculation of pre-judgment interest.
35I turn next to re-possession of the farm equipment.
Issue No. 2 - For the purpose of enforcement of the default judgment granted, does a bailiff or do the police have the authority to enter the Six Nations Reserve to repossess the farm equipment?
36Independent of the rights that the Program has as a judgment creditor to enforce the monetary terms of the default judgment, the Program asks the court for relief to assist the Program in enforcing its rights and pursuing the remedies available to it under the PPSA. Specifically, the Program seeks the court’s assistance to enforce the terms of the conditional sales contracts (Nos. 304-003, 304-004, 304-005, 138-14, 138-15, 138-16, and 138-17).
37The Program served notices of intention, under two Federal statutes, to enforce and realize on security. Under the Farm Debt Mediation Act, S.C. 1997, c. 21, s. 21, a notice of intent by the secured creditor was sent to the Defendants. In addition, as noted above, under the BIA, s. 244(1) a notice of intention to enforce and realize on security was sent to the Defendants.
38In November 2021, the court made an interim order with respect to preservation of the farm equipment: IAPO v. Hill (24 November 2021), Ottawa CV-20-82450, (Ont. S.C.). The interim order provides that, the Defendants “shall not dispose of, alienate, encumber, sell or assign ownership of the items listed at page 4, paragraph (l)(i)-(xi) of the notice of motion dated June 18, 2021.” That order remains in effect until 45 days following the date of release of these reasons, unless the court orders otherwise.
39The Program intends to re-possess the farm equipment that is the subject of the conditional sales contracts. Once again, based on the evidence in the first, second, and third affidavits, I find that the Program is entitled to re-possess the farm equipment listed in para. (l)(i), (iii)-(x) of the notice of motion (“the Equipment”). As noted in para. 20, above, the Program abandons its claims for relief permitting it to re-possess the farm equipment listed at paras. (l)(ii) and (xi) of the notice of motion.
40The Program asks the court to include in the default judgment (a) a term identical to the substantive prohibition in the interim order, and (b) terms intended to assist the Program and the bailiff in locating, accessing, and re-possessing the Equipment.
a) Sections 88 and 89 of the Indian Act
41Sections 88 and 89 of the Indian Act are relevant to the enforcement of security interests with respect to chattels situated on a reserve. Section 88 provides that, with some exception, general provincial laws are applicable to and in respect of Indians in the province:
Subject to the terms of any treaty and any other Act of Parliament, all laws of general application from time to time in force in any province are applicable to and in respect of Indians in the province, except to the extent that those laws are inconsistent with this Act or the First Nations Fiscal Management Act, or with any order, rule, regulation or law of a band made under those Acts, and except to the extent that those provincial laws make provision for any matter for which provision is made by or under those Acts.
42Section 89 sets out specific restrictions with respect to mortgages on and seizure of property on reserves:
(1) Subject to this Act, the real and personal property of an Indian or a band situated on a reserve is not subject to charge, pledge, mortgage, attachment, levy, seizure, distress or execution in favour or at the instance of any person other than an Indian or a band.
(1.1) Notwithstanding subsection (1), a leasehold interest in designated lands is subject to charge, pledge, mortgage, attachment, levy, seizure, distress and execution.
(2) A person who sells to a band or a member of a band a chattel under an agreement whereby the right of property or right of possession thereto remains wholly or in part in the seller may exercise his rights under the agreement notwithstanding that the chattel is situated on a reserve.
43In summary, pursuant to s. 89(2), a secured creditor may exercise their rights to a chattel situated on a reserve only if the chattel is the subject of a conditional sales contract. Because of the restriction on enforcement imposed by s. 89(2), the Program restricts its efforts to enforce and realize upon security to the security interests established in the conditional sales contracts.
44In Mitchell v. Peguis Indian Band, 1990 CanLII 117 (SCC), [1990] 2 S.C.R. 85, the Supreme Court of Canada considered s. 89 of the Indian Act in the context of an action by a lawyer, against the defendant band, for the payment of a contingency fee. At p. 131, La Forest J. highlighted that, since 1763, the Federal Crown “has always acknowledged that it is honour-bound to shield Indians from any efforts by non-natives to dispossess Indians of the property which they hold qua Indians, i.e., their land base and the chattels on that land base.”
45At the same page, La Forest J. concluded that the purpose of the Indian Act “is not to remedy the economically disadvantaged position of Indians by ensuring that Indians may acquire, hold, and deal with property in the commercial mainstream on different terms than their fellow citizens.” He continued by emphasizing that “Indians who acquire and deal in property outside lands reserved for their use, deal with it on the same basis as all other Canadians.”
46Did the Defendants acquire and deal in the Equipment in the context of the commercial mainstream?
b) The Defendants’ Acquisition of and Dealing in the Equipment
47In para. 2 of the statement of claim, the Program is,
a) described as “a duly-registered non-profit corporation under the laws of Ontario”;
b) described as providing “business, farm and agri-business financing to Status Indians” in Ontario; and
c) identified as having its registered office in the Village of Stirling, Ontario.
48There is no evidence from Mr. Hall which specifically addresses the three allegations set out in the preceding paragraph. It is, however, clear from the record that the Program carries on the types of business described in sub-paragraph (b). From the exhibits, specifically those to the first affidavit, it is clear that the Program’s head office is located in the Village of Stirling, Ontario.
49The Defendants did not defend the action. They are therefore deemed to admit the allegations in the statement of claim – including the allegations made in para. 2 with respect to the Program as an entity, the nature of the Program’s business, and the location at which the Program’s business is carried out.
50I find that by entering into loan and conditional sales contracts with the Program, each of the Defendants acquired and dealt in property outside lands reserved for the Defendants’ use. The Defendants did so on the same basis as all other individuals who do so in Ontario – including pursuant to the provisions of the PPSA.
51I turn to the provisions of the PPSA with respect to enforcement of and realization on the security interests created by the conditional sales contracts.
c) The Conditional Sales Contracts and Part V of the PPSA
52The PPSA is a law of general application in force in Ontario within the meaning of s. 88 of the Indian Act. The PPSA therefore applies to the parties to this action, except to the extent that the PPSA is inconsistent with the Indian Act.
53Part V of the PPSA is titled “Default – Rights and Remedies”; it applies to security interests which secure payment or performance of an obligation: s. 57.1. For the reasons that follow, I find that the conditional sales contracts secure payment or performance of an obligation within the meaning of s. 57.1 of the PPSA.
54The conditional sales contracts were entered into between 2008 and 2018. They are each subject to a PPSA registration. Each contract is set out in three pages and is comprised of what appear to be standard form documents.
55In each of the contracts, the first page is identical; it addresses entitlement to independent advice. Whether signed by both Glen and Michael, or by Michael only, the signatory acknowledged that he chose not to obtain independent legal, accounting or other advice before entering into the contract, despite acknowledging in the document that he had “ample time and opportunity to do so”.
56The terms of the contracts, set out in two pages of standard form wording, vary slightly over time. Those variations are not significant for the purpose of Part V of the PPSA.
57Paragraph 8 of the terms and conditions provides that “[if] the buyer defaults in any way, the balance is due and the seller may: a) require the buyer to pay the balance, and b) repossess the property.” I find that the conditional sales contracts “secure payment or performance of an obligation” within the meaning of s. 57.1 of the PPSA.
58For each of the conditional sale contracts, Glen, Michael or both of them also signed an acknowledgement of assignment. In the assignment, the Defendants, individually or collectively, acknowledged that the subject conditional sale contract was assigned to the Program by the party selling the farm equipment. As a result, the Program stepped into the shoes of the seller.
59Having stepped into the shoes of the seller, the Program has the rights, remedies and ability to enforce its security interests as provided in ss. 59(1) and (2) of the PPSA:
(1) Where the debtor is in default under a security agreement, the secured party has the rights and remedies provided in the security agreement and the rights and remedies provided in this Part and, when in possession or control of the collateral, the rights, remedies and duties provided in section 17 or 17.1, as the case may be.
(2) The secured party may enforce a security interest by any method permitted by law and, if the collateral is or includes documents of title, the secured party may proceed either as to the documents of title or as to the goods covered thereby, and any method of enforcement that is permitted with respect to the documents of title is also permitted, with necessary modifications, with respect to the goods covered thereby.
60In addition to the rights and remedies set out in the conditional sales contracts, the Program has the rights granted under s. 62(1) of the PPSA. That section provides that upon default under a security agreement,
(a) the secured party has, unless otherwise agreed, the right to take possession of the collateral by any method permitted by law;
(b) if the collateral is equipment and the security interest has been perfected by registration, the secured party may, in a reasonable manner, render such equipment unusable without removal thereof from the debtor’s premises, and the secured party shall thereupon be deemed to have taken possession of such equipment; and
(c) the secured party may dispose of collateral on the debtor’s premises in accordance with section 63.
61Sections 63 and 64 of the PPSA deal with disposal of the collateral and distribution of proceeds from such disposal, respectively. It is incumbent upon the Program to comply with ss. 63 and 64 if, after taking possession of the Equipment, it subsequently disposes of the collateral.
62For the purpose of this motion, disposal of the collateral is not relevant. The Program seeks relief only related to enforcement of its security interests under the conditional sales contracts.
63The Program’s position is that nothing in the Indian Act prohibits the Program from relying on s. 62(1) of the PPSA to re-possess the Equipment. The Program intends to seek the assistance of a bailiff and, if necessary, the police to re-possess the Equipment.
64In support of that position, the Program relies on the decision of Riordon J. in R. v. Bernard (1991), 1991 CanLII 2647 (NB QB), 118 N.B.R. (2d) 361 (Q.B.). The decision involves an appeal by Bernard from his conviction in the N.B. Provincial Court on a charge of wilful obstruction of a peace officer in the execution of his duty (then s. 129(a) of the Criminal Code, R.S.C. 1985, c. C-46).
65It was undisputed that Bernard was entitled to the rights of an Indian under the Indian Act. He had entered into a conditional sales contract to purchase a tractor. The seller was Kenworth Metropolitan, a division of Paccar of Canada Ltd. Bernard defaulted on the prescribed monthly payments. The secured creditor obtained an order for interim possession of the tractor.
66The secured creditor provided a copy of the order to the sheriff. He attended, with two of his officers, at Bernard’s residence on reserve lands. Prior arrangements had been made (a) for RCMP officers to be on standby to assist if the sheriff and his officers’ encountered difficulties, and (b) to have a tow truck available to effect recovery of the tractor.
67Bernard refused to co-operate. The sheriff directed the RCMP and the tow truck operator to effect recovery of the tractor. A scuffle ensued. The RCMP officers handcuffed Bernard and placed him in their cruiser. The tractor was seized.
68On appeal from his conviction, Bernard submitted that the order for interim possession of the tractor did not fall within the scope of s. 89(2) of the Indian Act. In dismissing the appeal, Riordon J. concluded that the provincial Judicature Act, R.S.N.B. 1973, c. J-2 and the Rules of Court, N.B. Reg. 1982-73, made pursuant to that Act, are “laws of general application” within the meaning of s. 89(2): see Bernard, at para. 14. He also concluded, at para. 20, that nothing in the Indian Act precludes the seller, under a conditional sales contract, from exercising their right of re-possession of the subject personal property even if it is situated on reserve lands.
69The Ontario equivalent to the order for possession of property obtained by the seller in Bernard is an interim order for possession of property available pursuant to s. 104 of the Courts of Justice Act, and r. 44 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“Rules”). In the proceeding before this court, the Program does not request that type of order; it requests an order to assist it in exercising its rights pursuant to s. 62(1) of the PPSA. Given that the relief is being requested in the context of a motion for default judgment, the order sought by the Program is a final order, not an interim one.
70The fact that the Program seeks a final, rather than an interim, order is not sufficient to distinguish the Program’s rights to recovery from those of the seller in Bernard. I find that there is nothing in s. 89(2) of the Indian Act which precludes the Program from exercising its rights of recovery pursuant to the PPSA, even if the Equipment is situated on Reserve lands.
71I will next review the evidence upon which the Program relies in support of its request for an order that provides for the assistance of a bailiff and, if necessary, the police in the recovery of the Equipment.
d) The Defendants Failed to Co-operate with the Program
72The Defendants and/or their authorized representatives have, to date, failed to co-operate following the various defaults under the conditional sales contracts. As a result, the Program has been denied the opportunity to enforce and realize on its security.
73The dates of default commence on May 1, 2018 (Loan Contract No. 304-004) and continue until December 1, 2019 (Loan Contract Nos. 304-002, 304-006, 138-14, and 138-17 (A-B)). There is no evidence of communication between the Program and the Defendants (or their authorized representatives) for the period from the first date of default (May 1, 2018) to December 11, 2018.
74On December 11, 2018, the Program receives an email from Sandy Burkitt of Nation to Nation. Materials downloaded from the Nation to Nation website are included in the record. In those materials (a) Ms. Burkitt is identified as the Director of Nation to Nation, and (b) the organization is promoted as providing assistance to Indigenous Peoples to obtain debt forgiveness from debt incurred through legislated programs. The website materials specifically identify the organization as providing assistance in achieving debt forgiveness from the Program.
75In her email, Ms. Burkitt informs the Program that Glen and Michael are two of four individuals, each of whom is a member of the Six Nations Reserve, who have authorized Alex Hunsen of Hunsen Consulting “to handle ALL communication with their creditors”.8 In addition, Ms. Burkitt says that “Failure to communicate only with their authorized agent, namely, Alex Hunsen will result with the four individual members listed above filing criminal harassment charges and seeking the immediate ban of entry of your IAPO collections General Manager of Stirling, ON to Six Nations.”9
76The Defendants filed for bankruptcy on December 19, 2018. On December 20, 2018, Mr. Hunsen sends an email to the Program. In it, he advises the Program that he will, the following week, be obtaining an authorization from each of the Defendants permitting him to deal with the Program on their behalf. Mr. Hunsen concludes his email by advising that he has “an extensive list of IAPO members [whom the] Burkitt Team handles” and that he would, in due course, also be presenting cases on behalf of those individuals to the Program.
77The individual at the Program to whom Mr. Hunsen’s email is sent responds by asking Mr. Hunsen to address all correspondence to the Program’s general manager. Mr. Hunsen refuses to communicate with the Program’s general manager. Mr. Hunsen replies by email on December 20, 2018. In his reply email, Mr. Hunsen says the following:
Thank you for your email and a desire to streamline our communications. It’s such a refreshing turn of events.
However, if you have Mr. Hall in mind when you suggest to me to contact “the general manager”, it’s a resounding NO. Ms. Sandra Burkitt, who runs the show here, refused to include him in any discussions in order not to interfere with [a] number of investigations happening at this moment. Mind you, I will gladly follow your instructions if you had someone else in mind.
The good thing is that none of what I propose is time sensitive. We can always wait for your reaction once you will have time to address it. I understand that you are busy and delays are not our concern. Take your time.10
78There is no evidence that the Program responds in any way to Mr. Hunsen’s December 20, 2018 email. Nor is there any evidence that Hunsen Consulting provides the Program with the authorization mentioned in Mr. Hunsen’s initial email. As a result, the only method by which the Program is authorized to communicate with the Defendants is to deal with them directly.
79On April 10, 2019, the Program sends a letter to the Defendants directly. That letter is signed by Mr. Hall. In the letter Mr. Hall,
a) requests a signed authorization from the Defendants if they have an agent with whom they want the Program to deal on their behalf;
b) states that he would like to discuss with the Defendants the status of the Equipment and what the Defendants’ intentions are with respect to the Equipment; and
c) states that if the Defendants do not intend to keep the Equipment or are unable to reach an agreement with the Program as to the terms on which the Defendants may keep the Equipment, then he would like to discuss the return of the Equipment to the Program.
80On April 17, 2019, the Program receives an authorization, on Nation to Nation letterhead, signed by the Defendants. They therein authorize Andy Fisher to speak to any of their creditors on their behalf and to settle any of their debts. There is no evidence of any communication between the Program and Mr. Fisher until early June 2019.
81On June 3, 2019, Mr. Hall sends an email to Mr. Fisher. Attached to the email is a copy of the Program’s April 10, 2019, letter to the Defendants. In his cover email, Mr. Hall inquires, “Would you have time to discuss the attached?”
82Mr. Hall’s evidence is that he spoke by telephone with Mr. Fisher on June 10, 2019. Included as an exhibit to the second affidavit is a copy of the Computer Activity Log setting out Mr. Hall’s notes from the conversation. The substantive portion of those brief notes says, “Hills don’t intend to voluntarily turn over CSC equipment, indicated Six Nations police and council will prevent entering reserve to do so.”
83The Program does not take any further steps with respect to enforcement of their security interests until they respond to the notices of bankruptcy proceedings. In the fall of 2019, the Program files its proofs of claim and serves notices of intention to enforce and realize on security with respect to each of the Defendants.
84On January 15, 2020 the Program commences this action.
85The program is concerned about the recovery process not only because of the Defendants’ collective lack of co-operation to date. The Program is also concerned because of a prior experience with another borrower who received assistance from Nation to Nation.
e) Difficulties Historically Encountered by the Program in Attempting to Re-possess Equipment from an Individual Assisted by Nation to Nation
86In the first affidavit, Mr. Hall highlights the lack of success the Program had on a previous occasion when attempting to re-possess equipment that was secured pursuant to an agreement with another borrower. That individual had defaulted on their obligation and was being assisted by Ms. Burkitt of Nation to Nation. Mr. Hall’s evidence is that the Program was, on that occasion, assisted by a bailiff to re-possess the subject equipment. Mr. Hall describes that attempt at recovery of equipment as unsuccessful – with the bailiff having been met with aggression and a complete lack of co-operation.
87The Program’s unsuccessful efforts at re-possession on that occasion are one of the reasons why the Program requests an order permitting the bailiff, with police assistance if necessary, to enter the Reserve to recover the equipment listed at paras. (l)(i), (iii)-(x) of the notice of motion.
f) Summary
88I find that the Defendants have been entirely uncooperative in their dealings with the Program since defaulting on their payment obligations. Given the Defendants’ complete abandonment of their obligations under the agreements and contracts, there is reason to believe that the Defendants may take steps to prevent the Program from recovering the Equipment.
89I also take into consideration that the Defendants are aware of this action and are aware of the court’s interim endorsement. Yet, they chose not to defend the action and there is no evidence before the court that the Defendants took any steps in response to the interim endorsement. Last, I take into consideration the involvement of Nation to Nation and the Program’s prior experience with another borrower in receipt of assistance from that organization.
90For those reasons, I find that the Program is entitled to the relief claimed at paras. (m)-(p) of the notice of motion. That relief relates to re-possession of the Equipment and is reflected in the Disposition section at the end of these reasons.
Issue No. 3 - The Claim for the Proceeds of Crop Insurance
a) Background
91Prior to taking steps in their respective insolvency proceedings, the Defendants executed an “Assignment Request Production Insurance” in favour of the Program (“the Assignment”). The insurer by whom the insurance proceeds are payable is Agricorp, an agency of the Government of Ontario.
92Agricorp does not dispute its obligation to pay the Production Insurance (“the proceeds”). Its position is that, absent a court order identifying to whom the proceeds are to be paid, the proceeds should be paid into court. Evidence of Agricorp’s position is set out in the first affidavit. There is no evidence that, after July 2020, when the first affidavit was sworn, Agricorp either changed its position or paid the proceeds into court.
93The Program’s position is that it has a valid assignment to the proceeds, as a result of which the proceeds are not the Defendants’ property and do not vest in the bankruptcy trustee. The Program requests an order requiring Agricorp to pay the proceeds to the Program. The Program intends to apply the proceeds towards the Defendants’ indebtedness to the Program.
94There is no evidence as to the amount of the proceeds. Agricorp has not provided the Program with information as to that amount.
b) The Terms of the Assignment
95In May 2018, the Program’s General Manager, Mr. Hall, signed the Assignment on behalf of the Program. Immediately above his signature, the documents say the following:
By signing below, I agree to the following:
Indemnities owing to the Agricorp customer named above for the crop(s) specified in Section C will be jointly issued to the customer and the first assignee, and will be applied towards the customer’s indebtedness to the first assignee.
96The Defendants’ respective signatures appear immediately below the following acknowledgement: “I acknowledge that any cheques I receive from Agricorp for the indemnities assigned will be made payable to me and the assignee(s) named on this form.”
97The “Terms and Conditions” set out in the Assignment provide that an Assignment is effective only with Agricorp’s prior written consent. Under the heading “Assignment Confirmation Notices”, the Assignment provides as follows:
Assignee confirmation notices
Assignments only assign all or part of the customer’s right to indemnities and require Agricorp’s prior written consent. Once an assignment request is processed and approved by Agricorp, Agricorp will send an Assignee Confirmation Notice to the assignee(s). Assignees must report any errors to Agricorp upon receipt of the Assignee Confirmation Notice.
It is the responsibility of the customer and the assignee(s) to:
ensure assignments are in place
settle any disagreements that may arise from an assignment request.
98Agricorp sent the Program an Assignee Confirmation Notice (“the Notice”). A copy of the Notice, dated June 2018, is attached as an exhibit to the third affidavit. The Notice informs the Program that it has been designated as an assignee for the Defendants with respect to the “Crop Insurance Program” for the 2018 crop year. The specific crop covered is “Soybeans WW sft Red”. Like the Assignment, the Notice provides that any claim payment will be made payable to the Program and both Defendants.
99The Notice lists two assignees. The first assignee is the Agricultural Credit Corp. (“ACC”). The second assignee is the Program. The Notice states that any claim payment will be mailed to the address of the first listed assignee (i.e., ACC).
100Mr. Hall’s evidence is that, in May 2022, he communicated with the ACC. Mr. Hall inquired whether the ACC has a secured interest in or an assignment to the proceeds. An exhibit to the third affidavit is a copy of a May 2022 email from ACC’s Manager, Credit & Lending, to Mr. Hall. In that email, the Manager confirms information he had previously provided to Mr. Hall by telephone – that the ACC does not have an active assignment in place for the Defendants.
101It is also Mr. Hall’s evidence that the ACC is pursuing a claim, as an unsecured creditor, in the Defendants’ respective bankruptcy proceedings. By contrast, the Program registered the Assignment under the PPSA. A copy of the registration, which expired in October 2021, is an exhibit to the third affidavit.
c) Analysis
102The existence, historical or otherwise, of a PPSA registration with respect to the Assignment is irrelevant to the outcome on this third issue. Section 4(1)(c) of the PPSA provides that the Act does not apply “to a transfer of an interest or claim in or under any policy of insurance”.
103Agricorp does not dispute the validity of the Assignment. I find the Assignment to be valid. As a result, I also find that the proceeds do not vest in the trustee: Golder v. Innis (Trustee of) (1987), 65 C.B.R. (N.S.) 85 (H.C.J.), at p. 86.
104The Assignment provides that the proceeds “will be applied towards the [Defendants’] indebtedness to the first assignee [the Program].” The method of payment prescribed in both the Assignment and the Notice requires Agricorp to issue a cheque for the proceeds to both the Program and the Defendants. What is the significance of these terms to the Program’s rights as a judgment creditor and the Defendants’ rights as judgment debtors?
105In P.E.I. Produce Company Limited v. Springloam Farms Ltd. (1997), 1997 CanLII 4620 (PE SCTD), 155 Nfld. & P.E.I.R. 277 (P.E.I.S.C.), the court was required to consider the rights of parties to crop insurance proceeds paid into court by the insurer. Springloam made an assignment of the insurance proceeds to the Royal Bank of Canada (“RBC”). The terms of the assignment were similar to those of the assignment in the matter before this court.
106At para. 11 of Springloam, Matheson J. concluded as follows with respect to payment of the insurance proceeds:
The effect of the assignment is to assign all of the proceeds from the crop insurance to [RBC] subject to the cheque being payable to [RBC] and Springloam. This does not in any way diminish the effectiveness of the transfer of all of Springloam’s interest under the insurance contract to [RBC], but simply allows Springloam to ensure that in the event such payment is made, it is applied against its loans and not for some other purpose; and secondly, if at the time the payment is made or becomes available to be made there is any surplus, it could go to Springloam.
107In summary, the assignments made in Springloam and by the Defendants are not unlimited assignments. The Assignment is limited by the interests of the Program, meaning to the amount of the debt owing collectively by the Defendants: Springloam, at paras. 14, 16.
108There is no evidence before the court as to the amount of the insurance proceeds which Agricorp acknowledges it is liable to pay under the subject policy of crop insurance. As of this date, there is also no evidence as to the amount which the Program may ultimately recover from the Defendants, including through re-possession and sale of the Equipment. It is simply not possible, at this time, to determine the extent to which the Program may be required to look to the proceeds to reduce the amount owed by the Defendants under the default judgment.
109Agricorp shall (a) pay the proceeds from the crop insurance into court, and (b) provide the Program with a copy of the receipt from the Accountant for the Superior Court of Justice for the monies paid into court. It will be up to the Program to bring a motion, at a later date, for an order for payment out of court of a portion or all of the monies – to be applied to reduce the amount owing under the default judgment.
Disposition
110The Program is entitled to default judgment and to the relief requested with respect to re-possession of the Equipment. The Program is not, at this time, entitled to payment of the proceeds from the crop insurance. In summary,
Glen Hill is solely liable to the Program for the principal sum of $17,811.86;
Michael Hill is solely liable to the Program for the principal sum of $29,277.24;
Glen and Michael Hill are jointly and severally liable to the Program for the principal sum of $437,112.86;
Glen Hill and Michael Hill shall furnish the Program and the bailiff engaged by the Program with particulars as to the location of the Equipment and any other information relevant to the efforts of the Program, including with the assistance of a bailiff, to re-possess the Equipment;
Glen Hill and Michael Hill shall not dispose of, alienate, encumber, sell or assign ownership of the items listed at page 4, paragraph (l)(i), (iii)-(x) of the notice of motion dated June 18, 2021. (Note: This term replaces the related term of the interim order made in November 2021.);
Glen Hill and Michael Hill shall grant the Program and the bailiff engaged by the Program access to the premises where the Equipment is located, including that the Program and the bailiff engaged by the Program shall be entitled to enter locked premises, for the purpose of re-possession of the Equipment;
The Program shall be entitled to use the reasonable means necessary to re-possess the Equipment including, where necessary, the assistance of a Sheriff, Peace Officers, or the local police authorities; and
Agricorp shall,
a) pay into court, to the Accountant for the Superior Court of Justice, the full amount of the insurance proceeds payable under the policy of crop insurance issued by Agricorp to Glen Hill and Michael Hill for Soybeans WW sft Red for the 2018 crop year; and
b) provide the Program with a copy of the receipt of the monies paid into court under para. (a), above.
- The Program shall be entitled to bring a motion for an order for payment out of court of the monies paid into court pursuant to paragraph 8(a), above.
111Counsel for the Program shall make arrangements with the Office of the Trial Co-ordinator for a half-day hearing to address pre-judgment interest. Any materials (affidavits, a factum, or authorities) upon which the Program intends to rely with respect to the applicable rate and/or the calculation of pre-judgment interest shall be filed with the court in accordance with both the most recent Notice to the Profession and the Rules.
112The issue of costs will be addressed at the same time. Therefore, the Program shall file a bill of costs and, if the Program chooses to do so, a brief factum with respect to the issues of entitlement to, scale of, and quantum of costs. The documents filed with respect to costs shall be in accordance with both the most recent Notice to the Profession and the Rules.
113The references to the Notice to the Profession and the Rules, are intended to address (a) the form of the documents to be filed, (b) the method of filing, and (c) the deadline by which the documents are to be filed.
114Together with the materials upon which the Program intends to rely with respect to pre-judgment interest and costs, counsel for the Program shall file a draft judgment, in Word. The court intends to finalize the terms of the default judgment at the same time that issues related to pre-judgment interest and costs are determined.
Madam Justice Sylvia Corthorn
Released: August 23, 2022
IAPO v. Hill Schedule "A"
Loan No.
Name of Defendant
Date
Types of Documents
Monetary
Interest Rate
Date of Default
Amount Owing as of Date of Default / Secured Property
00066-013
Glen
04/13/2015
Loan Contract
$ 44,529.65
N/A
04/13/2019
$ 17,811.86
04/13/2015
Promissory Note
$ 44,529.65
N/A
304-001
Glen and Michael
04/30/2018
Revolving Demand Loan Agreement
$ 285,141.00
8.75
04/30/2019
$ 237,456.24
04/30/2018
Promissory Note
$ 285,141.00
8.75
304-002
Glen and Michael
04/30/2018
Loan Contract
$ 5,845.87
8.75
12/01/2019
$ 6,692.23
04/30/2018
Promissory Note
$ 5,845.87
8.75
304-003
Glen and Michael
09/16/2013
Cond. Sales Contract
$ 19,131.85
8.75
09/16/2018
$ 13,759.16
09/06/2013
Promissory Note
$ 19,131.85
8.75
2002 John Deere Grain Head
09/16/2013
Cond. Sales Contract Item (viii)// para. 9
Ackn. of Assignment
PPSA to 09/19/20
304-004
Glen and Michael
09/13/2013
Cond. Sales Contract
$ 6,940.33
8.75
05/01/2018
$ 6,356.56
09/13/2013
Promissory Note
$ 6,940.33
8.75
2013 Bruns Bin/Horst Wagon
09/13/2013
Cond. Sales Contract Item (x) //para. 12
Aci<n. of Assignment
PPSA to 09/26/2020
Loan No.
Name of Defendant
Date
Types of Documents
Monetary Amount
Interest Rate
Date of Default
Amount Owing as of Date of Default / Secured Property
304-005
Glen and Michael
02/20/2014
Cond. Sales Contract
$ 31,376.64
8.75
12/01/2018
$ 22,953.55
02/20/2014
Promissory Note
$ 31,376.64
8.75
1997 CIH MFD Tractor
02/20/2014
Cond. Sales Contract Ackn. of Assignment
2008 Salford Cultivator Item (iv) / / para. 15
PPSA Registration
304-006
Glen and Michael
04/30/2018
Loan Contract
$ 5,291.21
8.75
12/01/2019
$ 6,057.26
04/30/2018
Promissory Note
$ 5,291.21
8.75
304-007
Glen and Michael
04/30/2018
Loan Contract
$ 123,982.99
1
12/01/2018
$ 124,813.10
04/30/2018
Promissory Note
$ 123,982.99
1
138-16
Glen and Michael
04/01/2011
Cond. Sales Contract
$ 44,705.88
6.75
12/01/2018
$ 19,024.76
04/01/2011
Promissory Note
$ 44,705.88
6.75
2011Case lnt'I. Harvester
04/01/2011
Cond. Sales Contract Ackn. of Assignment
Item (v) // para. 22
PPSA Registration
04/28/2016
Cond. Sales Contract
Ackn. of Assignment
04/28/2016
Promissory Note
$ 22,204.88
6.75
Lo"'n No.
138-14
Michael
07/28/2018
Cond. Sales Contract
$ 98,186.31
8
12/01/2019
$ 22,514.14
1993 John Deere Combine
07/28/2018
Cond. Sales Contract Ackn. of Assignment
For $95,000
2002 John Deere Flex Head Items (vii) and (ix)/ para. 25
04/30/2018
Cond. Sales Contract
For $19,305.31
para. 25
Ackn. of Assignment
04/30/2018
Promissory Note
$ 19,667.21
8.75
PPSA to 08/11/2020
138-15
Michael
09/30/2009
Cond. Sales Contract
s 44,875.00
6.75
04/13/2019
$ 4,861.23
10/01/2009
Promissory Note
s 44,875.00
6.75
2009 John Deere No Till Drill
09/30/2009
Cond. Sales Contract
Item (i) // para. 28
Ackn. of Assignment
PPSA to 10/20/2020
04/13/2015
Cond. Sales Contract
8,642.64
6.75
04/13/2015
Promissory Note
s
8,642.64
6.75
Loan No.
Name of Defendant
Date
Types of Documents
Monetary Amount
Interest Rate
Date of Default
Amount Owing as of Date of Default / Secured Property
138-17 (A & B)
Michael
09/26/2011
Cond. Sales Contract
$ 2,000.00
A
8.75
12/01/2019 $ 1,901.87
$ 7,521.72
B
8.75
09/12/2011
Promissory Note
$ 9,521.72
8.75
1996 Brillion Cultipacker
09/12/2011
Cond. Sales Contract
For $2,000.00
A
2004 GMC Model 2500 Truck
Ackn. of Assignment
For $7,521.72-
B
Items (iii) and(vi)/ para. 31
PPSA to 09/30/20
01/20/2016
Cond. Sales Contract
For $2,701.11
Ackn. of Assignment
01/20/2016
Promissory Note
$ 2,761.11
8.75
04/30/2018
Cond. Sales Contract
For $1,601.34
8.75
Ackn. of Assignment
04/30/2018
Promissory Note
$ 1,661.24
8.75
Default Judgment Granted
Principal Amounts
Glen alone
$ 17,811.86
Michael alone
$ 29,277.24
Glen and Michael
$ 437,112.86
Total
$ 484,201.96
COURT FILE NO.: CV-20-82450
DATE: 2022/08/23
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
INDIAN AGRICULTURAL PROGRAM OF ONTARIO
Plaintiff
– and –
GLEN HILL and MICHAEL HILL
Defendants
INTERIM RULING
(Motion for Default Judgment)
Madam Justice Sylvia Corthorn
Released: August 23, 2022
Footnotes
- Throughout the balance of these reasons, the plaintiff is referred to as “the Program”. Glen Hill and Michael Hill are collectively referred to as “the Defendants”. For ease of reference, the Defendants are referred to individually by their respective given names.
- Throughout the balance of these reasons, a general security agreement is referred to as a “GSA”.
- The farm equipment is described in detail at paragraph (l)(i)-(xi) of the notice of motion dated June 18, 2021.
- The General Security Agreement executed by Glen is referred to as “Glen’s GSA” and that executed by Michael as “Michael’s GSA”. Those two agreements are collectively referred to as “the GSAs”.
- Italics as in original.
- All upper-case letters as in original.
- All upper-case letters as in original.
- All upper-case letters as in original.
- Bold and/or italic font as in original.
- All upper-case letters as in original.